Major rebound on Wall Street

There was a major rebound on Wall Street on Thursday. Stocks bounced back more than 400 points on news that the federal government could help absorb bad debt from banks.It seems as though investor emotions could not go through any more extremes than they have for the past week. There was fear and panic on Monday as the Dow dropped more than 500 points; jittery confidence as the market bounced back on Tuesday over 140 points; then, on Wednesday, more fear and a nearly 450-point plunge. Finally, on Thursday, stocks soared more than 400 points.

"When individuals and Wall Street professionals show extreme levels of panic, is actually -- usually a time when it has paid to actually think about investing in the market again, as opposed to running away from it," said Mike Santoli, Associate Editor, Barron's Magazine.

On Thursday, investors didn't run, they bought. They bought mostly because Treasury Secretary Henry Paulson reportedly said the government is considering a plan to take over the real estate debt that has created a virus in the financial world. Investors have lost $700 billion. This new plan could be the vaccine.

However, it comes too late for some venerable institutions.

"People watched Lehman go down, and then AIG, and then Merrill Lynch. And they're wondering who's next -- Who's going to be the next big company that fails?" said Alan Skrainka, chief market strategist, Edward Jones

The next big company could be Morgan Stanley or Washington Mutual. Both institutions are looking for buyers because of their gamble in risky subprime mortgages and a falling housing market. But that market is beginning to change.

"And the good news is that we are seeing that housing prices are starting to stabilize. They're not there yet, but they're getting there," said Dolores Conway, economist, USC Lusk Center

To help us get there, the president rearranged his schedule on Thursday to focus on the crisis.

"The American people can be sure that we will continue to act to strengthen and stabilize our financial markets and improve investor confidence," said President Bush.

Unfortunately crude oil prices rose more than $100 earlier Thursday. The price of a barrel of oil settled on a 72-cent hike to nearly $98-per-barrel.

In the meantime, the House took aim at speculation in the oil and commodity market, approving a measure to track trading abuse. The president is threatening a veto.